SAN FRANCISCO: Alphabet’s Google Cloud expects to generate at least $58 billion in new revenue over the next two years, signaling the unit’s growing importance within the tech giant’s broader business strategy.
During its July earnings call, the company revealed that Google Cloud had surpassed a $50 billion annual revenue run rate. However, the division’s backlog of unrecognized sales contracts is growing even faster than revenue, Google Cloud CEO Thomas Kurian told investors at the Goldman Sachs Communacopia + Technology conference on Tuesday.
Kurian noted that about 55 per cent of Google Cloud’s $106 billion sales backlog is expected to convert into revenue within two years. This estimate reflects only existing contractual commitments, excluding future deals or customers the company anticipates onboarding. The cloud unit also saw a 28 per cent quarter-over-quarter increase in new customers, Kurian added.
Google fined $425m for privacy breach
Significantly, nine of the world’s ten largest AI labs are now Google Cloud clients, including notable rivals to Google’s own AI products, such as ChatGPT-maker OpenAI and Anthropic, which was recently valued at $183 billion, according to Reuters.
Despite cloud services accounting for only 14 per cent of Alphabet’s total revenue last quarter—dwarfed by advertising from its core search engine business—it remains one of the company’s fastest-growing segments.
With Wall Street demanding proof that massive AI investments can yield real returns, Google Cloud appears well-positioned to capitalize on the boom. Its continued rise comes as Google’s core search business navigates the challenges of monetizing AI-driven search while facing mounting regulatory scrutiny in Europe and the US.
In July, Alphabet CEO Sundar Pichai cited strong cloud demand as the primary driver behind the company’s decision to raise its 2025 capital expenditure plans from $75 billion to $85 billion.